Her recording company, Nettwerk, released her first album in 1988. After recording several albums, she organized the all-female music festival Lilith Fair in 1997, 1998, and 1999. Some of the money made from these concerts went to women's charities. McLachlan received the Elizabeth Cady Stanton Visionary Award in 1998 for helping women's music.

She married her drummer, Ashwin Sood, in 1997. They have a daughter, India, born in 2002.